Session 2 on ports and shipping services

Olivier HartmannGaël Raballand

Port & Shipping servicesShipping and marine Terminals Logistics

Port marine operations are largely under public port authorities;

Very few exceptions, only when the whole port is under concession

• Bulk terminals managed by private sector are often dedicated facilities with limited public service obligations

• Container terminals are operated as public service facilities

• Off-dock container yards are fast growing as quick-fix to port congestion

• Private sector is the norm for logistics services, except very few countries (Ethiopia is the notable exception)

Shipping services

• Liner shipping: Transformation of the industry from end-to-end services into a network, with connection of main services with local (=feeder) service at main hubs

• Hub status gives better connectivity, lower rates and shorter transit-time, but few ports in Africa can claim that status

• Debate about the importance of national shipping line was closed decades ago, but sporadic attempts to revive flag reservation (Ethiopia, Sierra Leone)

Container terminals: the starting point

• Container trade development was constrained in Africa:– Growth in volumes exceeding terminal capacity in the near future– Increased pressure on container terminal efficiency:

• Increasing size of vessels demanding high productivity for container terminals

• Complexity of the shipping networks with development of hub and feeder ports: no port wanted to be perceived as a feeder port

• Assumption was that private sector had both the needed knowledge and financial resources to deliver in this context

• As a consequence, accelerating trend to involve private sector in terminal expansion and operations:– Acceleration at the end of the 2000s: Banjul may be the only West

Africa port without concession!

Container terminals:what happened (1)

• On the productivity side, progress was recorded, but several public terminals offer similar levels of performance: Mombasa, Durban, Walvis Bay, Port-Louis

• On port dwell time, the terminal operator has limited influence, so no reason to expect progress there

• On capacity development, a mixed conclusion: when and where there is economic rationale, additional capacity development is taking place, whether driven by public or private sector.

Container terminals:what happened (2)

• On prices, no decrease:– Tariff structures have been preserved in the switch to private

operators, and even increased in some terminals– Fixed costs are predominant: a given set of infrastructure and

handling equipment can handle a very wide range of traffic– Consequence: beyond a certain traffic threshold, additional

activity is just additional profit• One area of possible concern: container terminals are

usually cash-cows for integrated operators. Extracting them from the port authority may disrupt other critical sections which were cross-subsidized

Container terminals: some key questions

• Oligopolistic pricing behavior? in West and Central Africa, two terminal operators control over 80% of the terminal capacity (Bollore and APM Terminals), frequently jointly.=> From public to private monopolies at the regional level?

– Selection of operator is frequently ‘opaque’– Lack of capacity on the public side to effectively regulate and monitor

• Unrealistic commitments: projected capacity development far exceeds traffic growth

• But logistics systems would probably have collapsed without involvement of private sector

=> What should be a way forward for port operations?

Logistics services and dwell time• Long port dwell time was assumed

to be the result of port handling inefficiencies

• Reality is more nuanced:– There is not one single pattern, but

several contrasted profiles– When speed is desired needed, it is

usually possible– Long dwell time usually occur:

• When it correspond to economic optimum for trader (storage strategies)

• Enterprise behavior plays a large role=> Need to adopt a broader view than pure logistics efficiency (handling pricing and customs procedures are key – pre-arrival)

Quartile

Case 1: Camerou

nPost

arrival

Case 2: Camerou

nPre-

arrival

Case 3: Transit

Post arrival

Case 4: Transit

Pre-Arrival

25% 10.5 4 7 2.5

50% 18 7.5 14 5.5

75% 30 14 27 9

Logistics and IT services

• IT solutions have been developed for the logistics industry and control agencies:– Customs systems, – Community systems, with two broad types:

• Port community systems (focusing on the logistics process)• Single Window Systems (focusing on the trade and documentation process)

– Efficiency systems for optimization:• Fleet management solutions / cargo tracking schemes based on GPS

tracking• Terminal operations solutions

BUT risks occur when the process is driven by technical solution over a needs assessment approach. Human factor and incentives neglected when they actually matter most…